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rental income

lindalee
Level 1

two unmarried taxpayers live together as a couple.  One has been reporting rental income. What are the ramifications if the other taxpayer now wants to claim the rental income?

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IRonMaN
Level 15

That comes as a complete surprise.  If they both own the property they both should be splitting the rent - not one reporting it over the other because it saves taxes.  I think the IRS kinda frowns on those kinds of things.


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IRonMaN
Level 15

Who owns the rental property?


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lindalee
Level 1

They purchased the property for cash jointly so there is no clear ownership.  The tax parcel is listed in one of their names only.  They also purchased appliances etc which is being depreciated.

 

 

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sjrcpa
Level 15

The purchase settlement sheet will show the legal owner.


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lindalee
Level 1

There is no purchase sheet.  It was a mobile home purchased from a friend for cash several years ago.  One of the taxpayers has been reporting the rental income and now they think they want to switch.

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IRonMaN
Level 15

Why are they thinking that now?


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lindalee
Level 1

One partner just started receiving SS and wants to claim the rental income.  They both file single so the other partner who still works would have less tax to pay.  Overall the two would receive a larger refund if they switch.  

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IRonMaN
Level 15

That comes as a complete surprise.  If they both own the property they both should be splitting the rent - not one reporting it over the other because it saves taxes.  I think the IRS kinda frowns on those kinds of things.


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